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InvestWELL Report |
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Question:
How can I use mosaic theory in my investment research?
Answer:
Mosaic theory is defined as a method of analysis which involves collecting both public and non-public (often non-material) information about a company in order to determine the proper value of the company's share.
For example, the company's president makes a public announcement that a company will be expanding into new profitable product lines, but does not disclose any more information. Your friend owns a large grocery store and tells you that the company was making inquiries about a particular product which is very profitable and currently available only in Australia. Hence, you have a potential to put the two pieces of information together (based on mosaic theory) and perform analysis that incorporate both public and non-public information.
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Which of the following is an example of financial analysis based on mosaic theory?
A) Listening to the company's teleconference
B) Putting together public and non-public information
C) Technical analysis
D) Buying based on tips from a broker
Answer to the Quiz
at the bottom of the newsletter
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(Cumulative %)
Investment Strategy
InvestWELL Picks has managed to stay in the positive territory as the general market (as defined by S&P 500 index declined steeply to negative 33%.
Chart 1.
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- During the last month, the US equity market registered a small decline (Chart 2 & 3). We believe the market is ready for a significant rally in December/January.
3 Years and Last Month
Charts courtesy of StockCharts.com
- During the last month, the Canadian market (Charts 4 & 5) declined more than its US counterpart due to the drop in energy prices.
3 Years and Last Month
Charts courtesy of StockCharts.com
- Last month, the Canadian economy lost 77K jobs while the unemployment rate increased to 6.3%. The majority of the job losses were concentrated in Ontario.
- The European Central Bank led a round of aggressive interest-rate cuts in Europe. They were joined by the Bank of England and Sweden's central bank. New Zealand and Indonesia also cut rates. All the monetary-policy moves show how seriously central bankers around the world are taking the threat of recession.
- U.S. officials have agreed to a $326 billion rescue of Citigroup, once
the largest U.S. bank and a pioneer of the one-stop-shop model which combines financial services for business and consumers.
- After seeming to weather the worst of the credit storm, the mutual-fund industry has been getting walloped, shedding more than 20% of assets under management in just five months.
- According to a report from the World Gold Council, retail investors' demand for gold bars and coins has jumped sharply in the past few months. But institutional investors have kept the upper hand: Their heavy selling has more than offset retail buying and pushed gold prices to their lowest level in more than a year.
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(see
explanation)
Charts 6 - 8: Advancing/Declining Line, VIX and Equity Put/Call Ratio
Charts courtesy of StockCharts.com
and DecisionPoint.com
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B is correct.
Mosaic theory combines both public and non-public information. It helps to improve the quality of financial analysis.
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Thank you for reading InvestWELL Report.
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The contents of this publication are the property of InvestWELL Financial and may not be summarized, reproduced, or rebroadcast in any fashion without our written permission.
InvestWELL Financial’s first priority, as a provider of independent and unbiased financial information, is to educate our clients. Not only do we provide practical information about securities, but we also coach our clients to become successful independent investors. As such, InvestWELL Financial does not assume any responsibility whatsoever for the use of any information from the website or related publications. Although all sources of information are vetted and the information is believed to be reliable, it is not provided as investment advice. Past performance is not an indicator of future performance in securities. Each portfolio must be balanced and based on personal circumstances. High-risk investment decisions should be made in consultation with an investment professional.
InvestWELL receives no commission or benefit of any kind from the companies whose securities InvestWELL Financial showcases. We do not necessarily own shares in the showcased securities, but if we do, these shares would only form a very small part of widely-held and publicly distributed companies. There is no intention whatsoever of profiting in a manner where the price-impact of trading or holding of a security might arise. The website and related publications of InvestWELL Financial are intended to only be used for educational purposes.
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